Inflation slowing in Ukraine in 2019 turned out to be more significant than NBU expected
The inflation slowing in Ukraine in 2019 has turned out to be more significant than it was projected in the forecasts of the National Bank of Ukraine (NBU) published in inflation reports within 2019 (6.3% as of late 2019) and assessments of other expert organizations, the regulator has said in comments on inflation on its website.
As reported, consumer price growth in Ukraine in 2019 slowed to 4.1% compared to 9.8% in 2018. The NBU has determined a target inflation rate of 5% ± 1 percentage points.
The NBU said that reducing inflation to the target in 2019 is, first of all, the result of the NBU's consistent monetary policy aimed at achieving price stability in combination with a balanced fiscal policy of the government. The key factor in a significant slowdown in consumer price growth was the strengthening of the hryvnia exchange rate. It occurred due to the high interest of investors in hryvnia financial tools, given their attractive profitability against the background of a long period of macroeconomic stability, as well as the general increase in the efficiency of the Ukrainian economy.
The decrease in inflationary pressure was also supported by a general decrease in global prices of energy that Ukraine imports, and a weakening pressure on the part of food supply.
At the same time, inflationary expectations of the population, financial analysts, business and banks were gradually improving. Together, these factors outweighed the effects of faster than expected growth in consumer demand and wages.